Currencies ate effective financial assets which can increase
or decrease in value relative to other currencies. The value of a currency can
be affected by many factors including domestic interest rates, economic growth
and flows of trade and capital between countries.
An investor buys currencies in the hope that they will
appreciate in value against the investor’s domestic currency. When an investor
converts the currency back into their domestic currency, they will see profit.
Currencies have a poor investment case for long term growth.
Unlike the stock market, it is not possible for the entire market to rise in
value. Additionally, it has to be noted that currency is a unit of exchange and
not a real asset itself. Even if the size of global economy grows, that is not
to mean each of its currencies will appreciate in value.
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